Walmart and Tesco Make Big Moves in Social Strategy

Tesco just announced its acquisition of social media marketing firm BzzAgent. This follows Walmart’s April acquisition of social media analytics firm Kosmix.

The world’s first and third largest retailers have thus set into motion what they view as the next stage in customer intelligence and engagement.

Each firm’s acquisition reflects a gap in their prior organization. Tesco has maintained what is apparently one of the most advanced customer intelligence databases for over a decade, while Walmart’s current consumer insights group was launched in February of 2011. (I’ve created a Storify story with background on Walmart and Tesco’s consumer intelligence approaches up to and including today’s acquisition.)

With a wealth of consumer insights already at hand, Tesco’s acquisition of a firm that specializes in linking loyalty and social-network promotions makes perfect sense in extending their existing intelligence into social engagement. What they do not get with BzzAgent is a social intelligence platform – a way to collect insights from social networks. Tesco may already have such insights through their existing database in order to add social graph connections as an additional layer on its existing consumer insights.

What is so interesting about this acquisition is that Tesco is merging a marketing agency (of sorts) into a research group, albeit a research group that has been running Tesco’s loyalty program.

Walmart’s acquisition of Kosmix reveals their immediate need for consumer intelligence. Walmart’s business strategy to date has been famously based primarily on control over their supply chain and the resulting price advantages. The recent focus on consumer insights seems to signal that “everyday low prices” are not going to remain the same competitive advantage they have been, likely due to increasing global competition. Thus, Walmart is beginning to think about consumer experience.

Kosmix is a social data aggregation and analysis tool, with an algorithm they call the “social genome”. According to a blog by their founder; “the Social Genome builds rich profiles of users, topics, products, places, and events”. And there you are – Walmart hopes to begin building consumer profiles through social data mining. Of course, profiles from social media mining are only a small (and often misshapen) piece of the puzzle, and Walmart will have to integrate other customer data sources to have truly relevant intelligence of the sort Tesco is leveraging. No doubt they have the resources to do it.

Walmart seems to also see the Kosmix acquisition (and subsequent formation of @Walmartlabs) as their launching pad for social and mobile commerce, and if Kosmix delivers profiles linking people, products, places and events, then this will indeed provide an excellent launching pad.

It will be interesting to see what kind of targeted programs are emerging from each of these brands six months down the road. And it will be equally interesting to see what kind of response this triggers from other general retailers, as well as how specialty retailers will need to respond.

Share your thoughts in the comments here, or in the Quora question on this topic.